Abstract:
Though, the door is open for private investment in Gurage zone, its level is very low as evidenced by information from study zone. Hence, this study was conducted with the main objective of assessing micro level determinant of private investment in Gurage zone. Both primary and secondary data were collected by using semi structured questionnaire for primary data, while both published and unpublished data source were reviewed for secondary data. A survey was conducted in Gurage zone and the primary data was collected from 137 randomly selected sample private investment samples are selected by using multistage sampling method. Both descriptive statistics and econometric methods of data analysis were employed. In descriptive analysis frequency, mean, per cent, standard deviation, were employed to analyse the survey data and inferential statistics like t test and chi square test were employed for continuous and categorical variables respectively to compare mean difference. The econometrics model, specifically Tobit was employed to analyse micro level determinants of private investment in Gurage zone. The results of Tobit model revealed that education, firm size, access to credit, access to infrastructure and access to experienced labor have positive and significant effect on private investment. However, cost of material and risk of political instability were negatively and significantly affecting private investment. To encourage private investment, government must stabilize the market for raw materials and peace and security of the country facilitate credit access and increase investment incentives.
